Posted Jul 7 2011 2:59PM
The NBA owners are making money. No, they're losing money. Wait, they're hiding money. Or are they, maybe, bleeding money?
Now the league is getting defensive about it. The players' union is getting suspicious. Everybody is getting frustrated. Yet no one knows anything different from what they knew seven days ago.
The NBA's labor lockout will mark its one-week anniversary Friday, and coverage of so much recent nothingness already has gotten exhausting. Imagine what it will feel like after one month. Or one lost season.
With no negotiating sessions between the owners and the National Basketball Players Association since June 30 -- and no news generated from either side via bold talk, silly statements or those possible $1 million fines -- the vacuum has been filled by coverage consisting largely of analysis, opinion, spin and most recently, he-said, she-said interpretations of numbers either actual or estimated.
By Wednesday evening, events had come full circle: Forbes.com, the business web site whose magazine was cited as a source of controversial NBA financial "estimates" just one day earlier, carried a blog entry full of new numbers. These "audited figures" contradicted conclusions drawn from the original material and dispensed on The New York Times' web site.
Overnight, a "gotcha" moment -- Ah hah! The NBA really made $183 million in profits in 2009-10 -- turned into something far less sensational, both in headline-grabbing and bottom-line reality. Uh, never mind. The league lost $340 million that season and more than $1.5 billion over five seasons beginning in 2005-06.
And in a situation that would seem ripe for leaks of the complete, actual data, that has not happened. Why? Maybe those in position to leak it would not benefit from the facts being made public.
Confused yet? Here's a recap of the week in sports-biz reporting:
• The provocative sports web site Deadspin.com posted a story on June 30 contending that the New Jersey Nets used questionable accounting methods to "make money disappear," its headline says. The story was based on team financial data Deadspin.com obtained from more than five years earlier -- fiscal years June 2003 to June 2006. It alleged that through "roster depreciation allowance" -- a tax method dating back to 1959 -- the Nets were able to make a $6.6 million profit in 2004 look like a $27.6 million loss. The implication was, if the Nets could hide profits then, the NBA as a whole might be doing that now.
Trouble was, Deadspin.com misinterpreted the numbers, attributing as RDA what actually was money used for "player buy-out and a player injury." It posted a correction on its site within a revised version of the story. Also, it included a response from Carol Sawdye, NBA executive vice president and chief financial officer, that noted New Jersey lost a total of $87 million in the three years in question.
• On Tuesday, Nate Silver, founder of the FiveThirtyEight.com blog hosted by the Times, questioned the veracity of the NBA's figures. The blog most often analyzes statistics and data related to politics, but occasionally veers into sports and culture. After crunching numbers -- that is, estimates formulated by Forbes and Financial World magazines from 1989-90 through 2009-10 -- Silver wrote, "The NBA's claims of financial hardship should be viewed more skeptically. ... [It] is fundamentally a healthy and profitable business."
How healthy? Silver, relying on the magazines' estimates, wrote that the NBA made a profit of $183 million in 2009-10 -- the season in which the league, in audited figures shared with the union, cited a $340 million loss. That contention and the blog entry's headline -- "Calling Foul on NBA's Claims of Financial Distress" -- instantly caused a stir.
• Tim Frank, the NBA's senior VP of basketball communications, emailed a statement later on July 5 to Silver, disputing both his use of inaccurate estimates and the conclusions he drew from them. "Precisely to avoid this issue, the NBA and its teams shared their complete league and team audited financials as well as our state and Federal tax returns with the Players Union," Frank wrote.
"They decided they were going to believe Forbes over us," Frank told NBA.com. The estimates produced across 10 years by the magazines never came from access to the league's actual financial data.
Silver posted a fresh entry Tuesday evening that included Frank's objections and clarifications. In it, he cited the league's failure to disclose its financial records to the media and to the public as one reason for the inaccuracies.
"We have one set of numbers from Forbes," Silver told NBA.com Wednesday. "The NBA has a set of numbers people are supposed to take on faith. ... It wouldn't shock me if the league were losing money. It wouldn't shock me if it was making money."
• One encouraging element of the NBA's labor talks this time, right through the owners' decision last week to impose the lockout, was the absence of haggling over the numbers. Traditionally, the union has called for the teams to "open your books," while the owners have stonewalled. But this time the numbers -- audited figures -- have been shared and, with only a few raised eyebrows over certain interpretations, largely accepted by the players.
Until now. In the aftermath of Silver's blog item, Dan Wasserman, union spokesman, said that because the NBA's revenue projections for 2009-10 were more pessimistic than what actually occurred -- the league anticipated a $50.4 million salary cap per team but raised it to $58 million when business picked up -- league data should be viewed skeptically.
"So yes, we feel there is more than adequate basis for questioning their projections and financials," Wasserman said in a statement.
Countered NBA spokesman Mike Bass: "For Dan Wasserman to suggest that the league's future revenue projection, made before the start of the 2009-10 season during the worst economy in 80 years (which, by the way, turned out to be off by only 3 and a half percent) somehow relates to the veracity of our year-end audited financials is absurd. Mr. Wasserman's questioning of the league's audited financials based on this missed projection is a complete non-sequitur."
• Although Silver posted an update on his blog, only the original version made it into the New York Times' print edition Wednesday morning. That prompted the NBA to release another official statement, reiterating the "point by point rebuttal" Frank directed to Silver.
It read in part: "The New York Times' position is that, unless we are willing to disclose those same confidential financial documents to them [that the union got] it is appropriate for them to publish a story based on uncorroborated and unsubstantiated news reports."
The print vs. online discrepancy may have been due to a deadline issue or editors' failure to update the newspaper version. Asked if the NBA had further comment, Frank said: "The letter said basically what we wanted to say."
• Finally, near the end-of-business Wednesday, Forbes.com contributor Maury Brown posted a piece on the site's SportsMoney blog contradicting Silver's analysis. He wrote of the earlier Forbes estimates, "for those who don't have hard numbers, they are the best journalists can work from." But Brown then opts for Net Income numbers provided to him by "sources close to the NBA labor negotiations."
Those figures from 2005-06 through 2009-10, show that no fewer than 19 teams -- and as many as 24 -- lost money each season. The losses ran $220 million in 2005-06, then $285 million, $330 million, $370 million and $340 million. If the league's projections for this past season prove to be accurate -- 23 clubs losing a total of $300 million -- "the NBA will have lost $1.845 billion over the last six years, not turned a profit, as reported by Silver," Brown wrote.
Whether the media and the fans agree that the NBA operated so deeply in the red over the six-year life of the just-expired collective bargaining agreement ultimately doesn't matter. Whether the players and owners agree on how, precisely, it lost all that money might not matter either.
The players want to see a remedy come more from enhanced revenue-sharing than reduced compensation. The owners maintain that both areas are being addressed as possible fixes. In the meantime, the lockout drags on -- with a negotiating session possibly coming next week, with an uncertain level of urgency until players start missing paychecks and owners start facing cancelled games.
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